The primary reason I wanted to upgrade was because my G1 just didn't work anymore. I've been running the CyanogenMod on my phone for some time which seemed to help initially, but lately I had been having tremendous problems just answering my phone. Let that sink in - I couldn't answer calls on my phone. That was unacceptable.
The Google Nexus One came out in January and was very interesting to me but I had two percieved problems with it: no 3G on AT&T and no keyboard.
Since getting it I will say that the performance of the phone is outstanding. I have it loaded with everything I did on the G1 and more and it still remains completely responsive. That in and of itself is beatiful.
Android 2.1 is also very nice; there are a lot of little upgrades that make it very useful. Backing up settings to Google is very helpful when you need to wipe your phone. Having my ASN to get started without having to specify my ASN manually is nice. Live backgrounds are a slick touch. Multitouch browser that is actually responsive is great.
The virtual keyboard is working very well for me so far. I was very concerned with not having a hard keyboard, and if I actually used the SSH app as much as I thought I might then maybe it would be more painful, but for normal messaging, tweeting, and emailing the virtual keyboard is fine. Having a huge screen here is very helpful.
I don't really miss 3G data access since I've never had it. All I've had so far is edge, so being stuck there is fine (for now). I've heard rumors of a Nexus One w/ AT&T bands by this summer, so maybe I will switch when it comes available.
How about some unexpected surprises? The vibrator. The G1 was more noisy than powerful, mostly due to the two halves that buzzed together. The N1 is actually powerful - which is great in your pocket, but annoying at night. So my N1 lives on a folded-up hankie on my nightstand.
The other reason my N1 lives on my hankie is because of the blinking trackpad. The LED in that thing is bright, so in addition to sitting on the hankie to soften the buzz, it sits upside-down to prevent an annoying pulsing light all over the room.
I wish the trackball in the LED was multi-colored; I'm not sure if this is an API problem with programs or if the feature is just missing. I do like that there is a charging indicator that is separate from the notification indicator.
The proximity sensor in the phone is also a huge help. Being able to pull the phone away from your face during a call and be able to interact with the phone is amazing. I know why the iPhone has had this since the beginning; it's necessary for a touch-screen phone to have.
Overall I am extremely pleased with this phone. The form-facter is amazing and usability is a tremendous upgrade over the G1.